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IMF Hosts Forum to Debate Globalization  - 2004-09-22

The International Monetary Fund Wednesday hosted a forum on globalization and the problems caused by the accelerating integration of the world economy.

Martin Wolf, a columnist for London's Financial Times, has published a book entitled Why Globalization Works. In it he argues that the world's poorest countries suffer not from globalization but from the absence of globalization. They need, he says, the foreign direct investment and freer trade that characterizes fast growing formerly poor countries like China and those in Southeast Asia.

For Mr. Wolf the main global economic problem of future decades is likely to be the widening gap between rich and poor. "I don't think we have an easy way out of it. I don't think the World Bank, whose primary responsibility this is, knows what to do about it," he said. "Our attempts of rescuing, quote unquote, failed states have been pretty much unsuccessful. It's a huge mess."

Robert Dunn, an economist at George Washington University, argues that foreign aid, instead of improving the position of poor countries, actually makes things worse.

"And to the extent that there is any relationship between the receipt of foreign aid and growth it is inverse. That foreign aid pays countries to fail," he said. "And that therefore they don't feel much reason to cease to fail."

Mr. Wolf argued against Mr. Dunn's theory that foreign assistance to poor countries needs to be decreased, though he says the way in which it is disbursed needs to be changed.

"The conclusion of your position, with which I don't disagree, is that we are going to live for the indefinite future in a world characterized by desperate poverty?with the poverty problem getting worse," he said. "And all the global social problems that will create. It's a very difficult position we end up in."

Mr. Wolf also disagrees with opponents of globalization. He says their basic critique that big multi-lateral corporations rule the world is false. Neither, he says, do corporations control governments.